Oh come on, Nancy and Harry won't demand anything! They'll just go along with whatever.

If we're buying all this bad debt, let's just make sure there's lots of upside for us to compensate for the risk. Regulation is nice, but what I really want is substantial ROI. These guys were making billions demanding usurious interest rates from desperate people with bad credit and in tight financial situations. Let's give them a dose of their own medicine guys.

I posted the following article on my blog earlier today, but it seemed relevant here. I'm alarmed to see a handful of unelected officials rushing to commit the American taxpayer to a multi-billion-dollar bailout of the financial industry. Sure we need to stabilize the economy--but I'm very concerned about the potential long term costs to ordinary Americans and not convinced that the short term benefits outweigh these costs. Three questions need to be asked this weekend before we let Paulsen proceed:

1. What return will the American taxpayer receive for this massive and risky investment? Stabilizing the economy in the short term is important, but we need more than that. We must demand a long-term ROI commensurate with the risk we are taking. Wall Street needs to pay us back with significant interest. What mechanisms are we creating to ensure that they do this as they return to profitability?

2. Will this massive bailout of Wall Street really help the economy long term? My fear is that the national debt will explode, creating a long term drag on the economy that may be worse for us than the short-term meltdown we are trying to avoid today. How do we gauge the long-term effects of this action and ensure that they aren't even worse than the short-term problems we are trying to solve now?

3. What will this do to the federal government in the long term? If the national debt balloons will the government be so burdened by debt that it will be unable to provide essential services in the future? Will all this debt eventually force us to reduce other government programs, in particular Social Security, Medicare, education funding, and other domestic spending? (Some on the right wing may even hope to see the government crippled in this way, so we must be extremely wary.) What can we do to ensure that this bailout today doesn't destroy the government's ability to meet the needs of ordinary Americans in the future?

Here's the article from earlier:

Who Elected Henry Paulson?

Okay--Henry Paulson is a smart guy, I assume, and everything he's doing to bail out Wall Street may be absolutely necessary. Certainly, we know from the 1930s what happens when the financial markets crash precipitously. Everyone gets hurt--and ordinary people maybe the most. It's unseemly to see regular taxpayers having to bail out a bunch of greedy Wall Street millionaires who, when they were doing well, were not interested in sharing their wealth either with ordinary workers or with the government they are now turning to for help. But life isn't always fair, and while we might all like to let the Wall Streeters fall over the cliff they built, it really doesn't help us if they do so while our legs are shackled to theirs.

So maybe Paulson is doing the right thing. But I can't help but being disturbed by the fact that one unelected man (or a few, if we throw in Bernanke and some others) is pretty much unilateraly committing the US taxpayer to a huge and highly risky obligation that could cost us all billions or even trillions of dollars down the road. Doesn't the constitution give the power of the purse to congress? How is it that Paulson ended up with the purse in his hot little hands?

I guess we need to move fast (markets aren't known for patience), but let's please take just a few moments to be sure we know what we're buying before we let Henry Paulsen spend all our money. It seems to me that the American taxpayer is being asked to invest huge sums in failing investment companies when no private sector firm is willing to do the same. Maybe the gamble will pay off. But more likely, we're going to lose a lot of money. That means a much higher national debt. And that will have consequences. At some point it will be a drag on the economy. It may require higher taxes. And it may require huge reductions in federal spending, including huge reductions in spending on middle class benefits like Social Security and Medicare. The cost five or ten or twenty years down the road might be vast. And just to pour salt on our wounds, the underperforming assets we are purchasing (or will get stuck with if the loans we are making default) may very well be sold off at bargain basement prices to the same Wall Streeters who got us into the mess. If the government mismanges this (or manages it in the interest of certain of their big campaign contributors), the Wall Street crowd will get to buy back the assets they dumped on the taxpayer for next to nothing and then benefit from any future appreciation. This whole bailout, if managed stupidly or duplicitously by the government, could simply be a way for the Wall Street tycoons to transfer their losses to the regular-guy taxpayers while benefiting handsomely from a big run-up before the bailout and a future big run-up afterwards. And don't forget that the massive debt the taxpayer will be holding will force reductions in federal spending in the future--something that many Republicans and their corporate allies will see as a positive result.

So as Henry Paulsen opens our checkbook, let's be sure he really has our (the ordinary guy's) interest at heart and not the interest of his old friends on Wall Street and in boardrooms and in the Republican party. I'm not sure Paulson is doing the wrong thing but as always, caveat emptor, taxpayer.

Notice that the resistance to accepting any kind of medicine with their sugar was immediate: we are not to go "playing politics" in this time of crisis by asking for any remedial legislation along with the needed bailouts. This would prevent the GOP from filibustering any reform after the fact and cannot be countenanced.

The truth is that these toxic debts that the taxpayers are made to buy are completely worthless - they're not even mortgages in default. Those are worth at least something, i.e. a home. These are SIVs, CDOs, a host of phantom "investment vehicles" that are built on that single mortgage. That mortgage is spliced and sold several times over through these new-fangled financial instruments which should have been illegal under a responsible SEC. They're sold as solid AAA-rated investments to unwary buyers- banks, pension funds and the municipal governments from Norway, Australia to Japan. These are in fact worthless as they were conjured out of thin air, and the Dollar is going to become just as worthless by the time newly minted $1 trillion get spun out of thin air and hit the economy. Talk about the Weimar experience....

Bookmark this link to a graph over the past 100 years of Fed borrowing - it shows what "Helicopter Ben" really means and the sky's the limit here:

http://alfred.stlouisfed.org/graph?s_1=1&s[1][id]=BORROW&s[1][vintage_date]=2008-08-14&s[1][line_color]=%23FF0000&s_2=1&s[2][id]=BORROW&s[2][vintage_date]=2008-07-03&s[2][line_color]=%230000FF&chart_type=line&s[1][range]=Max&s[2][range]=Max

The resultant inflation will be staggering, but of course they will cook the CPI figures for the Nation of Whiners.

Why didn't the US government (both Dems and Reps) step in and prevent this from going nuclear? It's because they are in this together with the bankers. It's a way for them to get money withot going directly to the taxpayer.

Here is an inside expose by an ex Bush Sr. official, it's simply mind-boggling what's been happening:

http://www.scoop.co.nz/stories/HL0808/S00344.htm

If a mom-and-pop business fails, it's gone without a blip, foreclosed by the bank. When a bunch of crooks with golden parachutes of a few ten millions break the bank and collapse to nothing investments worth billions of dollars, they're bailed out by taxpayers. Hello moral hazard???

These greedy crooks and their govt cronies are the worst of the robber barons with true contempt for the "average" people too stupid to comprehend how they are being robbed.

They never teach these sleight-of-hand tricks in your Economics 101 classes either. Do most Americans know or care that the Fed is a private banking entity entrusted with the issuance of their money? Not if they've got American Idol and James Dobson.

Welcome to the Brave New World Order.

One other rule I'd like to see:

The originator of a mortgage must hold and service the mortgage for at least two years. (Or maybe five years.)

Let's get back to having actual banks holding mortgages. Banks used to make money by lending funds for at one rate, and paying lower interest to depositors. What was wrong with that model?

-- ARG

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

A major villain in this mess has been getting a pass from the MSM.

Bond rating companies are a major contributer to the meltdown.

They basically decided that they had no clue as to how to accurately asses the risk of the bonds make up of bundled sub-prime mortgages. So they threw up their hands and decided that they would just let the market determine the risk.

This introduced a positive feedback mechanism that has allowed a small amount of shorting to drive down the bond ratings, which drives the price down, which leads to more shorting and so on.

I can’t say this enough…we need millions of citizens to email or call their senators and congress reps and tell them NO BLANK CHECK.
This is so serious that we need to take a break from the campaign and address this problem. The democrats have got to find their voice and stand up to the power brokers. Let us show them we are with them. Overwhelm the telephones load the emails don’t stop until they know that we are watching and we will not let this slide.
Maybe we need to form a human chain and circle the Capitol
and let them know the people have had enough. NO BLANK CHECK, NO ABSOLUTE POWER TO THE PRES, NO MORE TRASHING OF THE CONSTITUTION.

I just started trying out automated forex trading and i am loving the results because it looks like
i wont need to get a mortgage refinance after all!

They were making billions demanding usurious interest rates from desperate people with bad credit and in tight financial situations.
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RTC must extract warrants to purchase stock in each one of those institutions based on the face amount of the loans they are taking from the companies.
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